California Introduces New Exemption From Securities Law For Crowdsourced Securities

California’s state legislature enacted or amended more than 40 sections in the Corporations Code and related codes, including new powers for corporate entities in an emergency, amended laws permitting remote shareholder and member meetings, and an exemption from the California Securities Law for crowdsourced securities. These changes are captured in the 2022 Edition of California Laws Governing Business Entities Annotated, releasing this month from CSC®Publishing in collaboration with LexisNexis.

The following provisions were among the changes coming from the 2021 legislative session:

EMERGENCIES: Boards may take action in the event of an emergency to mitigate the effects of the emergency or comply with lawful federal and state government orders. However, they can’t take any action that requires a shareholder vote, unless the vote was obtained prior to the emergency.

MEETINGS:

  • Shareholders or members of a corporation may participate, be deemed present, and vote in shareholder or member meetings by conference telephone or other remote communications if specified conditions are met.
  • Notice of a shareholders’ or members’ meeting or any report may be sent by electronic communication or other means of remote communication if the board determines it is necessary or appropriate because of an emergency.
  • Bylaws may set forth how delegates may participate in meetings. Each delegate shall have one vote on each matter presented for action.

SECURITIES: A new exemption to the qualification provisions of the Corporate Securities Law of 1968 was created for “crowdfunded” securities, i.e. the issuer is not a “blind pool” company, is not issuing fractional undivided interests in oil or gas rights or other similar mineral rights, is not an investment company subject to the federal Investment Company Act of 1940, and is not subject to certain reporting requirements of the Securities Exchange Act of 1934.

UNCLAIMED PROPERTY: Any payment of at least $2,000 in unclaimed cash must be made by electronic funds transfer.

The 2022 Edition includes a Table of Sections Affected listing all legislative changes, as well as Blackline Amendment Notes that indicate exactly how the laws have changed. There’s also an up-to-date California Fee Schedule showing required fees for business filings with the Secretary of State.

More than 80 new case notes from state and federal courts interpreting the law have been included in this edition, as well as six full-text cases discussing the latest legal developments regarding conversion, buyouts, fair market valuation, inspection of records, reverse veil piercing, and public benefit corporations. New cases are listed in the Table of New Annotations and marked with gray bars in the body of the book.

Readers also have online access to more than 190 state and county forms for incorporation/formation, qualification, mergers, dissolution, and name reservation for all business entity types via the LexisNexis Bookstore download center. A listing of forms and contact information for the California Secretary of State are included in the book’s appendix.

California Laws Governing Business Entities Annotated is available as a softbound book or as an ebook, compatible with dedicated e-reader devices, computers, tablets and smartphones that use e-reader software or applications. It’s also available on the LexisNexis Digital Library.

To learn more about the 2022 Edition of California Laws Governing Business Entities Annotated, call 1.800.533.1637 or visit us online at www.lexisnexis.com/csc

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